tv Fast Money Halftime Report CNBC July 23, 2013 12:00pm-1:01pm EDT
war. >> utx seeing a return to organic growth. flatten the quarter, but down. like dupont said, might be better than expected. also, wendy's ceo on "power lunch." >> plenty of people lining up for a bacon cheeseburger. >> let's get to wapner and the halftime. >> thanks so much. welcome. four hours to go until the close and right there on the washington is where we stand. it's a mixed day on the street. dow's got a modest gain. here's what we're following on the half. the oracle of tampa, he's bought it and has the returns to show for it. what are the super stock pickers new plays? net gain is netflix a subscriber miss? your signal to sell. one stock, two traders, one big debate is just ahead, but first, our top story. the earnings effect. sendinging the dow to a new high
yet again today, the s&p's been up 13 of the last 14 days. small caps are soaring and all asking this question. with earnings better than was feared, just how high can this market go? steven, josh, john, josh brown, that question to you. where do we go from here? >> earnings are better than expected, but as we talked about it at the outset of this earnings season, the expectations were low and that sets up for some really nice beat speed and we like to see that. i was surprised that some of the biggest earnings weakness had come from the tech sector, given how many people are bullish on tech, but the market seems not to care. we had a good show in financials, in industrials. those are pretty big chunks of the s&p, so we've been marching higher. >> steve? >> i've been shaving some of the trading because they bounce so much. generally, these were stocks that sold off so much, but yet
give b p the market's move higher, they move. my exposure slightly lower than it's been. this is the same quarterly set-up we've seep for the last year, year and a half. what i like about it though is that companies seem to be more optimistic and less guarded about second half growth. >> well, why aren't you more optimistic? when you get companies like honeywell or ge, banks across the board that have been beat and a number of other companies and we can do down the list, why rsht aren't you more optimistic? >> i am. i haven't shaved my core -- we've been up 13 of 14 weeks. the market's hitting new highs. at some point, there's a pause, so i don't feel compelled to add that extra risk in terms of trading positions and the bond market score d very, very well. >> joe? >> i go back to financials. i look at travelers this morning. now, we're getting a reversal. it's $3 low adding to the
existing position. within the financial space over the next couple of days, you're going to get earnings reports and the reeds, too. you had a nice pullback. i stay within financials. other than that, there is not as josh has correctly identified, there's not much to do. you can look at technology. it's been a yawn. i think it continues to be. >> you've got this belief out there that china's going to stimulate. others that europe is back or coming back. you have earnings here that are certainly better than what people had feared. i knew expectations had come in, but they're still better. >> more than important than that is the fact that next week, we have apple senior. the commentary and the language will be important and you can follow that up with ism on thursday. payroll's report on friday. so next week, obviously. >> you got the rustle of 25% year the date. this is one for the ages and we're only in july.
anyone that's been smart in a portfolio right now loaded with new highs, multiyear highs, decade highs in some cases. no one's out there pushing the envelope expect the people that have been trailing this market or denying it and i don't think you need to play as though you're in that camp if you're sitting on gains, you can relax. the summertime as joe mentions, you've got this mc thing. there are positive developments everywhere, but let's not act like we're going to be up 19 weeks out of 20. >> the reality is that i go to look at stocks, i like the stories. momentum, i look at valuations, i don't feel compelled to buy some industrials we're trading at six-year peaks when they only go through five year cycles traditionally, so i'd like some things to get better in price or fundamentals to dramatically improve, but i don't buy into last week, the finance through china said we're never going to simulate. then we have lee coming out saying we're not tolerating
below 7%. the economy according to the oracle of the chicago pits, rick santelli, he comes out and says it's 2% based upon the lee indicators. i think it's a lot lower than 7%. pimco, great organization. people do tend to talk their own book because they have a bias towards it naturally. i'm not not same. >> dr. jay? >> unfortunately, judge, not trading much today. there just hasn't been much. even some of the big outperformer, granted, gold and the miners, they're up a little bit today and even the utilities and the xlf, the tracker of financials in the s&p 500. we hit a new 52-week high today, but there just wasn't a surge of interest on the buy or sell side. i think people are waiting for the afternoon. probably taken a little time off. not leaving the markets, but are waiting for some reason to do something this afternoon. >> our next guest has been
called the oracle of tampa. jaybone is the one man band behind the police officer and firefighter pension fund. his annual returns have beaten out its bigger peers over the last decade. welcome back. nice to see you again. i know you've heard the commentary on the desk today. maybe a bit of a wait and see approach from the guys who surround me today. you're picking stocks. what do you like in in market? >> we're top down in thematic and we have been really focused on monetary policy lately. i think it's very important in revealing the way the market is processed and absorbed this big interest rate increase over the last couple of months in a positive fashion. i think that this steeper yield curve looking out is potentially a positive historically that's been very good for the economy and financial markets. i think somewhat underreported story is the fact that or at least when you look at the consensus, i think the fed is
going to be at this much longer than some suspect. these two informal targets they've thrown out, 6.5% on unemployment and 2% on inflation. for both to come together, i think that's years away and the reason i say that is that if the unemployment rate starts or the unemployment situation starts to improve a little bit, the labor force participation rate is going to increase and it's we're at historic lows now. if the labor force participation rate today were where it was in the year 2000, the unemployment rate would be 12.5%, so as the labor pool expands, it's going to be awfully hard to push that employment rate down. two, the price stability mandate, whether you look at headline cpi or the core deplater, they're missing the target month after month. for those two to come together, it's going to be years, i think. i think it's very important to dif wrennuate between the
tapering and the zero interest rate policy, meaning that the yield curve is going to steepen, which looking out, is very good for the financial markets and the economy. >> if that's the case, if you're scenario plays out the way you think it might, what stocks do you want to buy right here? what do you like? >> we're focused on this shale revelation. it's interesting. u.s. crude oil production increased by one million barrels a day last year. that's the largest in the world. the largest in u.s. history. i think this trend is just going to accelerate. particularly given the report by the energy department last friday. which has not gotten a lot of attention. it came out on 130 degree day last friday afternoon, but basically indicated landmark study that there's no relationship between fracking and ground water contamination, so it's becoming very increedingly popular to try to
transport a variety of not only commodities in and out of these shale regions like the water and the fracking sand and the pipes, but also actually transporting the commodity. the crude oil and if you step one, take it one step back from the rails and look at the suppliers to the rails, a company like greenbrier which manufacturers cars, freight cars and also provides services and supplies to the rail industry, they're really ramping up their tank car production and we've gone in this country from a standing start to now annually transporting 300,000 tank cars a year by rail. i think that's, that trend is going to continue. greenbrier has pulled back recently on a weak earnings report. there was some production concerns and problems. i think that's short-term and i think the suppliers to the rails, energy service in general is a place to look, but
specifically, the suppliers to the rails like greenbrier i think is a cheap way to play it. >> yeah, we see the stock we're looking at it right now. we're talking a lot about china. what may or may not happen given stimulus. given what economic growth could end up being. i've got a guy on the desk here who is about as negative on china as you could possibly be and you have stock picks that directly play into china. tell us what the stock picks are and then let's debate that's wh happening here. >> long-term, three to five years, now, are these stocks going to outperform the market the next quarter, the next year? i don't know. but do they have a good chance of compounding the return that does better than the market? i think they do. i like what the new leadership is doing. i'm cautiously optimistic in terms of their resolute determination to reign in this banking system. that was getting out of hand. accounting for too much of the
lending. the liberalization of interest rates which started last week where they're going to start scrapping the price controls on deposits, it's a symbolic first step. i think it shows their determination and number three, you do have, you're going to have about 250 million people urbanizing in china over the next decade or so. and while the super commodities cycle might be over, still, this is a country that is going to gradually mature into a more consumer oriented developed country, where maybe they throw at 6, 7, 8%. but that's still powerful for certain companies. if you look at companies like caterpillar on the machinery and equipment side or bhp on the mining side, they've really pulled back fairly sharply over the last year. caterpillar's off about 15%. bhp about 20%. generally, on the weak global economy and specifically on china and you want to buy these companies, particularly the miners in the teeth of global
slowdown when they're streamlining and downsizing and relentlessly cutting costs, getting ready for the next upcycle. that's what bhp has been doing. in fact, the industry as a whole has taken something like $2 billion in writedowns over the last -- excuse me, 50 billion in writedowns. >> it's steve weiss. i hear you in china and you may be right, three to five years down the road, but you're also right on the super cycle and the only reason cat got to where it was trading, should be more of its highs because the super cycle commodities is over and retail sales came out again today. guess what they were down. latin america, which a lot of people, somebody come on last week points that as a bright spot. the profession there has gone from up 28%, 22% quarter before to only up 9%, so it's dropping like a stone there. all the other segments are down. you've got much more
competition, so while your story may be correct on china and we don't have to go through that right now, cat's not going to play the role, i don't believe, that you believe it's going to play. >> well, i would say that you make a will the of valid points, but looking out, i think really as opposed to mare mining and resource sectors, their power and construction area i think is going to power the company over the next few years and account for a larger share of their operating income and of course, latin america, north america, are much more important to the company than just china. >> well, 50% of construction profits come from china. only 3% revenues, but 50% of their most profitable segment here to 4 comes from mining and that's getting crushed and if you like bhp, the only way you can like it is if they rationalize capacity, which by the way, they're not going too great and that means that there's less need for mine
equipment and less need for the aftermarket equipment and by the way, those sales are dropping as well. >> i think a lot of that is priced in to the stock at these levels. although, it could be a bumpy situation for the next few quarters, i agree. with our clients, we're trying to out three to five years and again, if china can tlip along at 6 or 7% with 250 million people urbanizing over the next decade or so, the demand for both machinery and equipment and natural resources is not going to evaporate. it's not going to be what it was over the last ten years, but i think it could still be steady and again, latin america and north america are more important to the company than china and the power systems area and energy areas and construction areas, i think are going to account for a larger share of their revenue and operating income over the next ten years. >> it's great to have you back. look forward to talking to you again soon.
>> thank you. >> go to the market flash desk for a look at coal names moving today. >> yeah, that's right. we are watching those coal names. pea body moving higher, second quarter profit drop, but btu did report a surprise profit boosted by a tax benefit. other coal names, resources and among them. scott, back to you. >> joe. >> i don't think that you could extrapolate that is going to be positive for long. maybe for the moment in other u.s. coal names. what this quarter is about australian operating costs coming down. the benefit of the weaker australian dollar. they're well positioned in aus trail kra. >> technically, these stocks have not broken above the 50-day yet. i don't think we can say this a new coal market. >> all right. coming up next, just hours away from what used to be the biggest earnings report of the quarter. so, will apple deliver a beat
and get the company back on track or is it another miss in the cards? the top portfolio manager with apple as his top holding joins us with a preview when we come back. golden opportunity sales event to experience the precision handling of the lexus performance vehicles, including the gs and all-new is. ♪ this is the pursuit of perfection. a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. golden opportunity sales event and choose from one of five lexus hybrids that's right for you,
the other side. here's carl last week where he called what's happening the daughter of all short squeezes. >> but you know something, i want to tell you now, you're not going to see bad things about -- they turn my thinking about them. anybody like you read any thing, anybody -- >> well, carl's laughing all the way to the bank right here. seems like dan lobe's getting a kick out of this as well. today put the following quote on his bloomberg terminal. new hlf product administered -- >> to the tune of -- the real question, we talked about this last week at delivering alpha, okay. there is right now a classic trade that we've all seen 25 years on this street. you've got a massive short
squeeze and you could throw the mund mentals off unless something else were to come out. if you don't, then you are foolishly involved in a trade that really right now is just the emotion is taken over you and that's a bad way to be. >> there's a bigger story here that i think is is even more fascinating. there's a period of time where some of the fund managers were able to just by appearing on the conference call, knock a stock down 15, 20% by asking the question. that time has clearly passed where we can't necessarily raise questions about a company and expect it to react based on that and i think what you're seeing here is a triumph of understanding market mechanics over understanding the business m model. those who looked at this model concluded hey, you've got these tons of supplies in people's garages, moulderring and not selling. that is not how the stock is
trading. >> came out fast trk stock traded down immediately. icahn said i like it and the street lined up on his side instead of ackman's side, so that's exactly what happened. we just had a guest come on talk about greenbrier. >> you have no ability to cover the short on that size. >> i agree with you. it's irresponsible short my position, but the facts are, the costs to borrow the stock has dropped significantly. as a matter of fact, it's a lot more difficult to borrow sears than herbal life. >> you've had several earnings quarters and this company is not coming out and reporting horrific news, saying hey, all this negative publicity surrounding the short position is getting to our suppliers. the suppliers don't care. they're also consumers. they don't care. >> had a couple of major sellers leave the company, okay.
your top tier have left the company to go to competitors. i'm not defending it either way. >> the climax of this story is coming. the stock broke down in april of 2012 from $70. that's exactly where the point of pain, the max point of pain is. that's where i believe the stock is going. that's the climax of this entire story. the final chapter clearly has yet to be written. it's $10 away. >> i think the moral of the story if you're a trader or investor, you do not follow the smartest men in the room into a trade in one direction or the other. we saw it's not working with the chipotle short. not with apple and not with herbal life. do your own homework is the message. >> these people have portfolios and they're not writing 100% of their names the best 50 or 60%
of the time. >> this is a story that has captivated many on the street and as the stock has continued to rise, especially lately, more than 30%, doc, and i'm going to give you the last word on this, over the last month alone continues to fascinate people as to how the final chapter will be written. >> and scott, we said it as we watched it fall apart and then we first, you got ackman and icahn on air together and i said it's a classic mistake. number one, to box yourself into a corner as mr. ackman did, but number two, to not take some of that money off the table. we have a huge winner. shorted from around 50 all the way down there, it breaks 30 and he doesn't cover a single share. that's a mistake. then you go out and tell the world that you're short this thing so massively and then carl and everybody else takes the other side of your trade. mr. loeb who's got a big fan either, decides to pile on.
there are a whole bunch of lessons. this will be in business schools f f forever on how not to do a trade. >> what was once the most anticipated earnings report of any quarter, apple's reports after the bell seem like just another release. let's take the position with paul meeks. he owns the stock. paul, welcome back. >> nice to see you, fellas. >> kind of says it all. we used to look forward to this earnings report like it was the be all end all of the earnings season. now, it's like, who cares. >> it's interesting because i don't expect anything significant in this quarter and maybe not even for the quarter ending september 30th if we're going to see some innovation, some product launches, which are going to be the next catalyst, this is probably announcements that you won't see for unit and revenue volume shipments until
december the earliest. >> there's a ton of focus on phones, ipads and clearly, those numbers are important. why doesn't anyone talk about how jgigantic the i-tunes store has gotten? if it were a stand alone business at 12.9 billion in revenue, it would be bigger than 300 of the companies in the s&p. does this thing ever command any kind of market attention or just continue to grow in obscurity? >> i think it will command some more attention, but right now, folks are focused on other things. if you also take a look at apple's retail stores, they're about the best stores in the history of retail. and so, yeah, there are a lot of businesses which have continued to propel the stock. i still like this thing long-term. i'm just really worried about what they say this afternoon and the guidance they give for the september quarter. >> it's the top holding on your fund. does the cost bases on this make you happy or sad? >> well, the fund that i run and i have only run it for a couple of months, my predecessor bought
the stock at $8.25. >> it's always the other guy. >> $8.25? >> now, would it have been a brilliant move to sell it at 7.05 last fall? sure. regardless of what happens this quarter or next, we've seen the downside in the stock and i think over time, if they show a glimpse of innovation, which i think they will, the stock goes to 600. >> it's steve weiss. let me ask you, suppose they don't show any innovation. suppose it's just a bigger screen, the fingerprint logon. if that's it, what's the stock worth without that killer product coming out? on a multiple earnings. >> yeah, i think it would continue to flounder. the stock's probably worth maybe ten times earnings. they also have $154 of net cash per share and that's how i get to my $600 price target.
but what happens over time, it's not just an iphone story. you may have a new iphone s, a lower cost iphone, but you have the i watch and television and maybe a deal with china mobile, so there's other catalysts besides just the iphone franchise. >> you've got qualcomm as one of your key picks here. a lot of smart money likes this name, yet it's the name that has underperformed. why do you still continue to like it? >> the reason i continue to like it long-term is that they will continue in my view even as technology evolves, to dominate their space in emotional chmobi however, as the market has morphed, we're going from developed countries to emerging markets, from smart phones to feature phones. they're taking a little bit of a hit not only in their licensing business, but their chip sales
business. i expect the quarter to be announced tomorrow to be a bit rough, but again, long-term, i like qualcomm a lot. >> i'm going to run. i want to get to this breaking news. paul meeks, we'll talk to you again soon. we'll see are wha the results deliver after the bell. carl icahn is urging dell shareholders to reject michael dell's bid. again, that vote scheduled for tomorrow around 6:00 eastern time in round rock, texas. the meeting adjourned one week or so again, but steve, here's icahn again. he's got a waning opportunity here to pupt his last two cents in, if you will. >> if we didn't have it, we'd probably have a half an hour show. i wouldn't be surprised to see them defeat the proposal, but so many institutions come out and say we're against it, then vote for it.
just told to squeeze more money out of the bid, but it remains to be seen where the stock will be if they soundly defeat this. does it go to nine? 15? >> if there's been a thought i guess that people are speculating that if the bid, if dell's bid is defeated tomorrow, that you'll be looking at a single digit. on the stock. then -- >> i think that's right. >> you go to a proxy fight, who knows what could happen. who knows how messy that could get. who knows if yi can could get all of h his directors elected. he probably thinks he can. the jury is certainly still out on that. others doubt that would happen, so if you have a split board, you've got an even bigger mess. >> and what does michael dell do with his significant old holdings. he owns a large part of the stock. is he going to be part of the carl icahn dell going forward? >> well, we continue to watch that developing story again. that vote coming tomorrow. late afternoon, 6:00 eastern time from down in texas.
today on big data download, the crew will be looking at apple today. they're revealing what they say is the most important data point in today's earnings report. find out what the bdd crew thinks at big data on cnbc.com. coming up next, netflix is the best performer in the s&p this year. but falling today on disappointing sub skrizer numbers. one of our traders seeing a buying opportunity out of that decline. a others runs for the hills. joe and steve, the showdown is next. [ kitt ] you know what's impressive?
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you by the dip. joe is the bull. steve weiss is the bear. make the case. >> i want to convince you, steven, that if you are long the stock not on the stock on this pull back, i want you and i mana managing this joint account to buy netflix. when you look, yes, the subscribers are weak, operating margins, profits margins, ebita, this company did better. it looks like there's a little bit of a turn. it's 1.6 times. i think there's the opportunity here potential ly for m and a. you've got all these telecommunication companies now that are going to be affected by rising rates in the inability to get growth from the consumer. they're going to have to go out and buy that growth. >> dreams don't come with parachutes. when this stock falls, it's
going to fall hard by measures you've got multiples on a pe basis are between 90 and 100 times. on an ebita basis, they're valued at about eight times the average ebita growth rate, about 40 times. free cash flow. 11 million bucks. sure, margin's approved, but how long can it cut back on sales and markets expenses. away from all that, i've got $5.2 billion in content liabilities when the number of content buyers is growing by leaps and bounds, whether it's cable, dish, 750 million that went into hulu. they've underperformed every analysts expectations. >> first of all, content costs came down first quarter. the other thing we didn't talk about and i d thi emotional penetration. unique visitors up 68% quarter
on quarter. minutes spent in mobile up 123%. >> i could have given you my 40 sections, five sections, it only said 100 times earnings and 40 times ebita. companies don't sell that. nobody's going to buy them because that would be so dilu diluted. >> never say nobody. >> i said nobody a year ago and here i am. >> and then the second thing i think you need to consider here is waiting for the air to come out of the momentum balloon. >> it happens. >> it should have happened today. >> no, it shouldn't. they don't fall once. to me, 650,000 subs is still a -- >> who made the more compelling argument? >> steve's right. valuation wise, but that has never been the reason to be long or short netflix. this is ten years, it doesn't trade on valuation. let me finish. this is an asset play. they have 40 million
subscribers. quarterly numbers are interesting and they move the stock. >> got a great story. if you think it's subscribers only, then you should buy blackberry with 75 billion subs, 2.5 billion in net cash as opposed to them, which is minus four billion in cash. >> you're complicating the argument so much. >> i'm just saying what's the point. this is an entertainment business. because you point to subscriber growth. >> not growth, not growth. total numbers. >> it's based on their underperforming their metrics and based on increasing competition. you have no valuation umbrella to protect this. >> your argument is too analytical. we're traders here. we want to make a decision here. >> but it's -- it's too complicated. technically speaking, i'm sorry. hang on. my dogs to pick stocks for me because they don't complicate things. >> steven, the traders right now
that are the fguying moving the stocks, they're looking at those may highs. they want that number to hold. >> look for 700,000 subs. maybe it's the content cost increasing and maybe it's the fact they've had an unblemished track record. >> too complicated. not listening to the competition argument. >> you own the stock? >> i have no interest in being in the stock. >> okay, so what are you talking about? >> joe is right. you are wrong. you have support for the trade. >> when the argument is too complicated, it does not work and the practicality of investing and trading. >> that's the most ridiculous thing. >> it's worked for 25 years. >> you can see through the complicatio
complications, when stocks get beaten up, that's when you buy. if you had bought fmz preferred, you made a lot of money. >> when a momentum stock blows up, that's not what you want to play. >> it makes smart people winners. >> we'll leave it there. tell us what you think won that debate. tweet us. we're going to have the results at the end of the show, i promise. meanti meantime, gasoline is down some ten cents, so the relief at the pump coming? jackie deangeles and the futures now traders are going to tell us. >> gasoline rising after earlier losses today, but still trading comfortably under the four-month highs that had hit last week. anthony at the nymex, are consumers going to see relief at the pump here? >> i don't think yet and here's why. a lot of these station owners bought the gasoline contracts at the high eer price, to they hav to work through what they're selling there. where we are now for us to see
lower prices, plus, we're still in gasoline season. the amount is still elevated. we still have hurricanes and geo political to worry about, but i think the worst is behind us and if we see increase from here, it will only be about five cents. >> still high prices for a while. jeff, do you think we've seen the topping for gasoline? >> unfortunately, no. i think right now, we are 23 cents above where we were last year. about 32 cents above where the five-year seasonal average is, but right now, if we have some type of refinery glitch or see a pop-up in egypt, we will see this move higher because crude oil is staying closer to 110 is 100 and therefore, pain at the pump will continue and jackie, always, always, higher gas, specifically $4 a gallon, that adversely affects consumer sentiment and behavior. we're in for a rough summer.
>> so your view is a little different. catch more on our online show. we're going to hear from ron paul on bernanke and gold and you'll find dr. paul online at 1:00 p.m. and check out our b g trader blogs and videos. >> thanks. next up, right here from refiners to chocolate, we've got all the big movers on the street in our top three trades. plus, hungry for profit? food stocks have been delivering. up next, a portfolio manager giving you his playbook for that space. that and much more when we come back.
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to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because now more than ever, the future belongs to those who challenge the present. for once on "power lunch," we're actually going to serve lunch. the s&p getting closer to 1700,
so will wall street change its forecast? many strategists are below that level right now. i have in my hands here a bacon, a pretzel bacon cheeseburger from wendy's. the ceo is going to join us. the pretzel bacon burger, it is here, i am going to eat it. i'll tell you about it and what's telling the real story of the economy. i'm going to have a bite, scott. it looks good. >> i'm hungry, too. we'll see you in a few. let's do our top three trades. first up, valero is mostly flat. profits were down 44%. joe, tl a look at it. >> profits should be down. the gulf coast margin is going to be weak. i think the real story here is the consideration of spinning out the lodgistics assets. i like that. you take the natural gas, the natural gas liquids they hold and find the value in it. so when i look at refining space, it's one of the better companies i would own. >> josh, talk to me about dupont. the stock is up, not as much as
it was earlier, but pretty good quarter. >> they've got this performance chemicals group. it's been a huge drag on earnings. finally, the company said to exploring the possibility of a sale. coincides, but not with pelg peltser's new involvement. we would be buying this profit taking intraday we're seeing. we think the stock's going higher. >> here's the deal. there's another seller of a tio 2 out there. rockwood. rioc. they're having problems getting it sold, so it's a crowded market for everybody. >> next up. >> but i like the stock. i do like the stock. >> scherr shia's soaring to a new high. weiss, back to you. it's been moving. great year. >> it's been a phenomenal move, but here's my issue. it's growing slowly and it's way
over valued at this level. and the yield's not much. it's less than 2% yield. so i would not be buying the stock. i think it's overpriced consumer stocks. >> are among thisgroup. investors poured in with fat dividends and with interest rates rising do, they still belong in your portfolio? let's ask a man who knows or at think he does, kevin dreier specializes in the consumer space. welcome. >> thank you. >> interest rates maybe will fall out of favor as a result if rates keep backing up. >> taking a step back, bottom's up investors, high margins, generate a lot of cash flow, pricing power. they have done well in part because of the dividend play, but what you do is a little bit different is we look for catalyst. >> speaking of cat lifts, one of the names on your list is pepsi,
the catalyst being the aforementioned nelson peltz, perhaps, that these guys were just talking about related to dupont. also a possibly play obviously given what he said last week at our delivering alpha pepsi and mongolese. >> pepsi has struggled with its beverage business, particularly in north america. frito lay is really the powerhouse in the snacking industry. we think his math is very compelling as well as the strategic rationale with mondo le se but there's a way to win the stock, turn around the beverage business or spin it off. >> are you betting on the fact that a deal of some sort happens, because certainly if you look at the pepsi reaction and the statement following the peltz take, doesn't seem as though they are interested. >> no, but i think that the pressure is certainly on management to deliver, and if they don't, i think the overnight puts, if you will, of
the various strategist options that mr. peltz laid out. >> how about conag? >> we look for takeover targets and in the case of conagra they have done a deal and bought raw corp. they had a small private label business before. this made them the leading private label manufacturer in the country. the u.s. under indexes were 18% of the food market and 20% to 30% and 40% depending on the market. they will get 300 million of synergies and double digit earnings growth. >> weiss? >> the single best cheapest idea? >> conagra would be a great cheap idea and i-beam. >> thank you. >> from industrials to biotech, we'll trade your tweets when we come back. that's not much, y. except it's 2% every year. go to e-trade and find out how much our advice and guidance costs. spoiler alert: it's low.
welcome back. when you the viewers ask, we deliver with trades on four stocks that have lit up my twitter feed. mastercard, honeywell and priceline. first up, joe, mastercard, what's the trade? >> mastercard above 600, reporting on wednesday, will be visa the following week, mastercard, and they will give you clarity, we hope, on the eu regulation. why not 700? it's elevated 500, elevated 600. >> you like this one for as long
as i can remember? >> better quarter on quarter volume growth. the numbers and evidence is there to support further appreciation. >> honeywell, scott? >> looks fantastic. broke out in january. never locked back. last earnings report was a good one and raised guidance as well. i'd be long the stock. >> priceline, doc, what do you do? >> i think you own it because of the european exposure and people looking for cheaper ways. >> gilad, weiss? >> i own it. future is bright. actually a value stock, ten times earnings going out a couple of years. >> final trades coming up next, plus we'll reveal who won the debate earlier when we see you in a couple of minutes. with a machine. what? customers didn't like it. so why do banks do it? hello? hello?! if your bank doesn't let you talk to a real person 24/7, you need an ally. hello?
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financial, start a position in morgan stanley today. >> did you really? >> i did. >> wow. what made you come around? >> joe terranova. >> and i liked td ameritrade's numbers retail. >> does it for us. don't forget to catch more of "fast" at 5:00. "power" starts right now. "halftime" is over. "power lunch" and the second half of the trading day start right now. >> moving target as the s&p zeros in on 1700, 1692 right now. are the strategists below that mark, and there are a lot of them. are they changing their forecast? a good report from wendy's and an even better burger. got to tell you. just had a bite of the new pretzel bacon cheeseburger. extraordinarily good. the ceo is here. he'll have the story behind the burger that has everyone in this newsroom talking right now. it is the pretzel bacon cheeseburger.